When you buy a ticket to an event, the value of that ticket goes to the event organiser in order to pay for that event (venue hire, equipment hire, artist fees, advertising etc) and Skiddle doesn’t see any of that money. Sometimes there may be a little inside commission paid by the event organiser to the ticketing company but it is a nominal amount and is very rarely paid for live music events. So although you are paying Skiddle £100 for two tickets we're only acting as a middle man by passing that money on to the event organiser. The only money earned by Skiddle is the booking fee.
Here’s an illustrative example:
£200 ticket, £10 booking fee = £210.
-£200 ticket price sent to event organiser
-£2 VAT paid to HMRC
-£2.50 fee paid to event organiser
-£3.15 paid to card processing/fraud checking (1.5% of transaction value )
This leaves £2.35 to cover the entire services Skiddle offers (which are outlined below) out of a £210 transaction (~1%). This example doesn’t not take into account handling/postage fees which are rarely profit making and often just cover costs.
Skiddle needs to earn money because, despite what some think, it does cost money to sell tickets. Whilst, from a consumer point of view, buying a ticket is usually a straightforward process (although the industry has more work to do to make it simpler). Rest assured the technology behind that is very sophisticated & more complicated than they look; And with consumers demanding ever more developments to make it easier and more convenient to buy tickets (select your own seats, mobile ticketing, multiple payment methods, print at home tickets etc) ticketing systems are set to grow ever more complicated and that costs.
On top of the ticketing system costs there is the infrastructure surrounding them – IT support, hosting, backup, website etc. If there is one thing that ticket buyers hate more than booking fees, then it is when the system crashes and they can’t even buy them in the first place. Then there are staffing costs – the people required to sell the tickets. And whilst it is true that significantly more tickets are now sold online than via the phone, the reduction in the number of people required to sell them hasn’t reduced in the same proportion. Booking lines have now become website support centres with people calling about bookings made online (usually when they have made a mistake) and, increasingly, customers are now turning to Twitter or Facebook with their queries. One major ticket agent described how they were taking one person a month off their phone team and putting them on the social media team such was the increase in online queries that needed a human to respond. The important thing to note here is that they were not reducing staffing numbers – only reallocating them.
So system costs, infrastructure costs, staff costs – it is all beginning to add up. Add into that VAT and business costs and suddenly we can see that there are real costs attached to selling tickets. But that’s not all – in order for a Skiddle to compete in this world for (and no one likes a monopoly so there are multiple companies selling tickets) there are marketing and advertising costs and affiliate fees in order to ensure that we secure the sale ahead of our rivals. Ticketing companies in general spend a fortune with Google every month. Finally, of course, Skiddle is a commercial enterprise – we have to make some profit too.
So hopefully that goes some way to explaining why there are booking fees. But why are they so important? Essentially Skiddle is no different to any other retailer and what's been explained is simply the cost of sale which applies to any retail business. However, when you go to a supermarket, for example, you don’t go to the checkout and get told that that your shopping comes to £100 and on top of that there will be £15 shopping fee.
Except that, in effect that is exactly what you have been charged*. The supermarket buys a product at the wholesale price (face value in ticketing terms) and sells it with a mark up (booking fee) at a retail price. The only difference between Skiddle and the supermarket is that we tell you what that mark up is.
*And actually, in reality that mark up is significantly higher at the supermarket. Whereas Skiddles will operate on margins (booking fees) of 10-15% the supermarkets will operate on margins of at least 40% but can go up to 70%, 80%, 90%+ on some products (because it is hidden we never truly know).